Baan: Back From the Brink

Dossier: Baan escaped bankruptcy and gained a new foothold in the ERP market thanks to serious cost-cutting. Has it gone too far?

During the mid-1990s, Baan was one of the top four makers of enterprise resource planning (ERP) systems, along with SAP, Oracle and PeopleSoft. But the Netherlands-based company fell behind in the technology and marketing race, to the point where it faced bankruptcy by 2000. That same year, Baan accepted a takeover offer from Invensys, a British company that makes automation systems, controls, power systems, and software for manufacturing industries.

Baan customer Herman Miller bought some protection by purchasing source code rights so that it can continue to update the software independently from updates delivered by the vendor. Herman Miller continues to use Baan IV, rather than the newer iBaan generation of technology.

Some customerswho feared that their expensive ERP investments were threatened or that they would be forced to switch to a different platform if Baan was swallowed up by a rivalinitially welcomed the new ownership. However, Invensys is now experiencing its own troubles, shouldering a debt of $4.3 billion (U.S.) at the end of September.

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"When Invensys took over they did a lot of cuttingbut that was OK because they got rid of a lot of fat," says Keith Bearden, chief information officer for dental equipment manufacturer A-dec Inc. of Newberg, Ore. "The problem is they've continued to cut as their own financial picture has worsened. My fear now is that they may be cutting into the muscle."

Other customers also fear the company will cut back on software development, delaying platform upgrades and future product releases.

That's a concern among automotive users, says David Schliewe, president of the Baan AUTO (Automotive User Team Organization) and director of information services for HUSCO International, a maker of hydraulic and electro-hydraulic controls.

Schliewe says many automotive users, who installed Baan ERP systems prior to the Year 2000, will be upgrading systems in two to three years. If Baan does not deliver an improved automotive product roadmap, it risks losing those customers.

On the positive side, customers say Invensys has lived up to its promise of improving customer service and supporta sore point at the height of Baan's troubles. Adds Brad Paris, director of information technology for Gardenburger, a Portland, Ore.-based manufacturer of meatless food products: "It also seems like the level of experience or knowledge of the technicians has gotten better."

Contributing EditorMel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.

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